Survey shows demand growing as buyers struggle to overcome barriers
RISMEDIA, July 22, 2008-Nearly half of all home buyers (44%) believe the housing market will improve once the new President takes office in January, 2009, according to a new survey recently released conducted by Harris Interactive® and commissioned by Move, Inc., operator of Realtor.com®.Forty-eight percent of women and 41 percent of men who plan to buy a home in the current market said they think the housing market will get better once the new President is in office.
At the same time, 81% of home buyers are still nervous about the current housing market and report the existence of barriers between them and homeownership. Today’s home buyers perceive the cost of a down payment (28%), their annual income level (20%), lack of confidence in the economy (26%) and high home prices (31%), especially in the Western states (39%) as barriers to buying a home.
Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41%) of current homeowners do plan to purchase a home again, 80% of all renters plan to purchase a home someday with 47% planning to purchase a home within the next five years. More people who plan to move will do so for space-related (26%) and life-stage change reasons (17%), such as having children (2%) or downsizing to a smaller residence (9%), not financial ones including an increase in rent (2%) or an expensive mortgage (less than 1/2%).
Most home buyers (78%) are also willing to make sacrifices to save and earn extra income for down payments and will compromise on neighborhood features and residential amenities in order to buy a home in the current market. Many of their choices may reflect changing values, including a growing concern over the environment, the importance of community features and the rising cost of fuel.
“These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming,” said Lorna Borenstein, president of Move, Inc. “This is great news to us and our colleagues in the real estate industry. As the leader in online real estate, we pay close attention to consumer perceptions and behaviors. This important feedback enables us to identify ways in which we can enhance the search experience so it meets the needs of today’s consumers who will become the homebuyers of tomorrow.”
Buyers Face Barriers to Homeownership
While about four out of five home buyers (81%) say they face barriers to buying a home in the current market, the greatest single barrier to homeownership today is high home prices (31%), a concern that was much higher in the West (39%), than in the South (27%) or Midwest (26%).
The second greatest barrier keeping buyers out of the current market is coming up with the money for a down payment (28%), with lack of confidence in the economy (26%) ranking third. Financial concerns generally are higher among people in the West (45%) compared to the South (33%) and about one-third of those ages 18 – 34 said lack of money (38%) or poor credit (18%) is a concern compared to only 11% and 5% (respectively) of those 55+.
Four out of five adults (84%) say there is something about buying a home that is intimidating, and one out of three (34%) say money-related issues being a concern. Finding the right home is the most intimidating part of the home-buying process for about one out of five (19%). About two thirds of adults (62%) have visited an online real estate web site and once on the site, 23 percent are looking to purchase and 52 percent are looking at what’s on the market.
“This survey surfaced important feedback that Realtor.com addresses by delivering the largest and freshest collection of listings and new features like Find a Neighborhood and Find Home Values to empower consumers,” said Realtor.com President Errol Samuelson. “We want to help remove uncertainties from the home buying process by making it as transparent and as consumer-friendly as possible. Providing the most comprehensive information, relevant tools and connections to local Realtors are only a few of the many resources consumers will find at Realtor.com to help make the process of buying and selling a home easier and less stressful.”
Trade-offs Favor Community, Environment
Today, adults rank crime rates (56%), proximity to daily conveniences (47%) and property taxes (46%) as the top three factors in choosing a neighborhood. Home buyers are more willing to sacrifice cultural and recreational amenities (18%) than green features (16%) like solar heating and energy-saving appliances, or forego proximity to work (7%) and daily conveniences (11%) to buy a house in today’s real estate market.
Concern over the cost of gasoline and the importance of community is evident in the importance buyers place on accessibility. Only seven percent of home buyers would be willing to sacrifice proximity to work and six percent, proximity to shopping. Only three percent would give up proximity to public transportation in order to buy a home in today’s real estate market.
About half of adults (49%) say green features like solar panels, energy saving appliances and low usage water heaters are “important” features. More care about green features (49%) than luxury amenities (31%), yet some would give up green features (9%) before storage (7%), luxury amenities (7%) or numbers of bedrooms or bathrooms (6%). Women rate green features higher than men (52% to 46%) and consumers aged 18 – 34 years of age rate green features the lowest (40%).
Kitchens (67%) and the number of bedrooms (69%) are the most important features today’s buyers are looking for in a home. Storage space (66%) and the number of bathrooms (62%) rank three and four on their list of priorities.
Mortgages Are a Mystery
Understanding mortgages and the financing process during these times of change in the credit industry is a major issue with a large number of buyers. Eighty-one percent of today’s home buyers and three quarters of adults (78%) say they wish the process of taking out a mortgage was easier to understand. In fact, some say that either understanding financing (9%) or the uncertainty of the mortgage process (6%) is the most intimidating part of buying a home.
For many buyers, changes in the amount of a down payment required for a mortgage is a significant issue. The lack of cash for a down payment is keeping about one quarter (28%) of buyers out of homes–more than those who have poor credit (15%), low household income (20%) or those who lack of confidence in the economy (26%).
Seventy-eight percent of home buyers are willing to make sacrifices to save money or earn extra income in order to be able to buy a home in the current real estate market. First to go would be spending (65%) on items such as personal luxuries (46%) and clothes, shoes and accessories (43%). Next, home buyers would go out less often (52%). Nearly half would clip coupons (47%) and 27% would cancel a vacation.
About the survey
The Homeownership study was conducted online within the United States by Harris Interactive on behalf of Move, Inc. between May 21 and 23, 2008 among 2,462 U.S. adults ages 18 and older, of whom 1,377 plan to buy a home in the current real estate market. These online surveys are not based on probability samples and therefore no estimates of theoretical sampling error can be calculated. For full survey methodology and all survey results please contact Lindsay Scalisi at 415.844.6217.